We’ve all seen the Facebook ads flooding our feeds, promising luxury cars and expensive prizes. Hundreds of companies claiming you can win a luxury car for only five dollars. Luxury handbags, money and houses are all part of the promotion for these companies. Once you’re in their funnel, it can be hard to escape the bombardment of these ads. They seem to have a never ending budget for advertising and, judging by the comments, an endless supply of victims as well.
Running a for-profit raffle is illegal in Australia. That’s why, in most cases, you aren’t actually buying a ticket to the giveaway. Instead, you usually sign up to be a “member” of a rewards program. That is the loophole that has caused this industry to explode. You can’t raffle off a new mustang but you can give it away to your members. These companies claim that they run these giveaways to promote membership. Thus exploiting a legal loophole, where members barely even know about the rewards program they have just joined.
If you visit the endless number of these giveaway websites, you know as well as I do that it’s almost always impossible to tell that there is any member program at all. The companies may use it as a legal shield, but it isn’t their true business model. People aren’t signing up for ten percent off a brand that no one has ever heard of. They are signing up because they believe they can win the car, handbag, or other luxury item being dangled in front of them.
Understanding why the majority of these companies are running a scam isn’t immediately obvious. Although they often use a legal loophole to operate, this doesn’t automatically mean they are screwing over their customer base. Unfortunately in this industry, the devil is in the details when it comes to how they are screwing them. More specifically, the devil is in the subscriptions.
Put aside for a minute that the industry is unregulated due to the legal grey area it operates in. Put aside the fact that no one oversees who actually wins and how the winners are chosen. For a moment pretend like everyone is honest all the time. Even if that was the case, the industry’s reliance on subscriptions is where they are truly screwing their “members”.
The real money spinner for this industry is accruing entries. There is no point spending all that money on advertising to their audience, only for that person to only buy one ticket. Chances are, when they don’t win, they won’t be rushing to sign up for another ticket will they? That’s why most of these companies offer subscriptions. ranging from $10 to $500 a month, there is a tier for every income level. To make it worth signing up, they sweeten the deal. For many companies, the entries build up over time. That is to say, the longer you are a member, the more entries you receive for each giveaway. It’s built-in loyalty.
Each month, members think they are getting closer to a win by staying loyal. In reality, they are running in place. To put it plainly, if a member gains just one extra entry a month and stays for a full year they are twelve times more likely to win than a brand new member. Meaning that if you weren’t in the first hundred members, you will be so far behind those who were. Now put those numbers on steroids. These companies sell premium packages worth hundreds of entries a month. Many have been running for much longer than a year. New members quite literally have no chance at winning. The old members hold all the tickets. In fact, unless you were one of the first members, your odds are nonexistent. That’s why they never tell you the odds.
Despite selling nothing but hope, people haven’t caught on to the scam. There should be hoards of angry mobs banging at the gate, yet for some reason there aren’t any. In fact, it’s actually quite hard to find even a negative comment on each social media post. The key to it all is that the operation is always intertwined with the charming personality of a social media influencer. Their target customers aren’t only fans of the giveaways, they’re fans of the person giving the stuff away as well. If you look at the comment section of these social media posts, you’ll often see a parasocial relationship being exploited.
“Parasocial relationship” is a term you may not have heard before. It is used by psychologists to explain the one-way relationship between celebrities and their fans. In modern times, parasocial relationships are on the rise thanks to the unprecedented access that social media provides to your favorite stars.
In the past, fans may have loved the work of a certain movie star, laughed at their interviews or even have identified with the characters played on the big screen. Now, thanks to Tiktok and Instagram, people spend far more time with celebrities, whether they are big or small. People can comment on and message their favorite influencer with unprecedented access to their lives 24/7. This happens all whilst the influencer has no idea who the person even is. The audience is familiar with every aspect of their lives whilst the celebrity is none the wiser. The audience is essentially anonymous to them.
As strange as this may sound, these parasocial relationships are exactly what is being exploited by these trade giveaway companies. In fact, it is the defining feature of the industry leaders. One leader has even gone on to say that it is not possible to run a trade giveaway successfully without the organic audience (i.e., fans) to sell too. These influencers are often promoting a life that many wish they could lead themselves. On top of this, they give away the chance to obtain a piece of it to their audience with their so-called “giveaways”.
When you don’t have a young charming face, funny friends or a beautiful wife to flash in front of the camera, you can always hide behind one off payments to charities in order to use their name on your marketing material. That way, people who see your ads think the money from the tickets is going to a good cause. Better yet, start your own charity where only thirty percent of the funds need to actually help anyone, and the other seventy percent can be used for expenses. For example, spending ludicrous amounts of money on cars, boats and stunts that will make the news to further push the trade giveaway business’s name and profit margins. Just be sure that charity is a separate entity so no one is the wiser.
Amidst all of this, real-life stories of deception highlight the true cost of these so-called giveaways. Take the case of an unfortunate woman who thought she had won a luxury car. Elated, she soon discovered that the car she had “won” still owed a significant amount of finance. Instead of receiving a dream vehicle, she was saddled with unexpected debt. This tale underscores the importance of understanding the fine print and the reality behind these enticing offers.
As these dubious giveaway schemes continue to flourish, it’s crucial for consumers to understand the true nature of these promotions. It demonstrates the powerful, often manipulative, sway that influencers hold over their audiences. While regulations may eventually catch up with this gray area of commerce, the onus is also on consumers to be more discerning about where their money goes. Until then, these companies will continue to exploit both legal loopholes and the trusting nature of their followers, selling dreams that, for most, will never come true.
Wealth Kingdom 
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